Fifth Circuit Holds Employer's Failure to Sign Arbitration Agreement Renders It Unenforceable

A federal Court of Appeals recently issued a straightforward but important reminder that courts will treat arbitration agreements as contracts, and contracts require mutual assent and proper execution. Mertens v. Benelux Corp., No. 24‑50954 (5th Cir. Dec. 17, 2025). An employer’s inadvertent failure to countersign an arbitration agreement – no matter how well-intentioned the employee arbitration agreement process – can expose employers to the full range of litigation, including class actions and representative claims, that such agreements were designed to avoid.

Employers across all industries should consider this decision as a prompt to review their arbitration processes and confirm that their agreements are being executed properly and consistently.

Factual and Procedural Background

The plaintiffs in this case were employees of Benelux Corporation, which operated Palazio Men’s Club in Austin, Texas. In 2024, the plaintiffs filed suit against Benelux alleging violations of the Fair Labor Standards Act (“FLSA”).

In 2020, Benelux distributed an arbitration agreement to its employees. The agreement had the following features:

• The signature page of the agreement stated that by signing, both the “Employee and the Club’s Representative” represented that they had read and understood the agreement and agreed to be bound by its terms.
• The page contained two separate signature blocks — one for “Club” and one for “Employee.”

The named Plaintiff, Belen Cadena, signed and dated both signature blocks when she received the agreement. However, Benelux’s General Manager – who routinely countersigned employee arbitration agreements – inadvertently failed to sign Cadena’s agreement. The General Manager testified that, upon seeing the “Club” signature block had been filled in (by Cadena), he mistakenly assumed another representative had signed on behalf of Benelux.

After plaintiffs filed the lawsuit, Benelux moved to compel arbitration. Cadena opposed the motion, asserting that the agreement was unenforceable because Benelux had never signed it. Cadena contended that she did not intend to be bound by the arbitration agreement unless and until Benelux also signed.

The U.S. Magistrate Judge recommended denial of the motion to compel, and the district court adopted that recommendation, concluding that the agreement’s language expressly required both signatures and that no valid arbitration agreement was formed. Benelux appealed.

Reasoning, Holding, and Decision on Appeal by the Fifth Circuit

In applying Texas state law, rather than Federal Arbitration Act precedent, the Fifth Circuit affirmed the district court’s denial of Benelux’s motion to compel arbitration, holding:

• The Employer’s Unsigned Agreement Was Unenforceable

Under Texas law, a valid contract requires offer, acceptance in strict compliance with the terms of the offer, meeting of the minds, each party’s consent, and execution and delivery with mutual intent to be bound. The court focused on the execution element, finding that the agreement’s language – requiring both the employee and Benelux’s representative to sign – unambiguously made mutual signatures a condition precedent to enforceability.

• “By Signing” Language Plus Dual Signature Blocks Controls

The court found that the combination of a “by signing” clause referencing both parties together with dual signature blocks was sufficient to require the employer’s signature. The court drew on analogous Fifth Circuit precedent (Huckaba v. Ref-Chem, L.P., 892 F.3d 686, 688 (5th Cir. 2018)) and Texas appellate authority (CC Rest., L.P. v. Olague, 633 S.W.3d 238, 240–41 (Tex. App.—El Paso 2021, pet. dism’d)), both of which invalidated employer-unsigned arbitration agreements with similar language.

• Conditional Language Is Not Required

Benelux argued the agreement should still be enforceable because it contained no express conditional language (e.g., “shall not be effective unless signed by both parties”). The court rejected this argument, holding that while explicit conditional language is highly indicative of a signature requirement, it is not legally necessary under Texas law. The court held that the plain meaning of language referencing both parties’ execution is sufficient.

• Conduct Cannot Substitute for a Required Signature

Benelux further argued that its conduct – drafting, offering, receiving, and attempting to enforce the agreement – evidenced its intent to be bound and should substitute for the missing signature. The court declined to reach this argument holding that where the agreement’s express language unambiguously requires both signatures, the inquiry ends with the contract’s text, and that extrinsic evidence of conduct was irrelevant.

Although this case was decided under Texas law, it serves as a good reminder to understand and follow through on the employer’s contractual obligations entailed in rolling out arbitration agreements.

Practical Tips for Employers in the Wake of Mertens v. Benelux Corporation

• Review your organization’s arbitration agreement’s language carefully. Agreements that reference only the “Employee” in the signature clause (e.g., “by signing, Employee acknowledges”) present a lower risk of invalidation due to a missing employer signature. However, agreements referencing both parties and that contain dual signature blocks evidence a mutual agreement, which may enhance enforceability.
• Audit existing arbitration agreements. If your organization’s arbitration agreement contains a “by signing” clause referencing both parties and/or includes dual signature blocks, treat the employer’s countersignature as mandatory. If these or similar provisions are present in your company’s agreements, review all existing employee files to confirm that agreements on file bear both signatures.
• Consult counsel about remediation. Retain and consult counsel to evaluate the language in your organization’s arbitration agreements pertaining to the Federal Arbitration Agreement and signature requirements, as well as to advise on strategies to strengthen arbitration agreements in case they are challenged in court.

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